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Legal Small Business Advice

The importance of an Employee Handbook and Contract of Employment

2 May 2020

As a small business accountant, a lot of our focus is of course on business performance and understanding our clients’ vision, so we in turn can develop bespoke solutions to help their business grow.


However, the services we provide don’t end there and in staying true to our ambition of being a one-stop-shop for all your business needs, we have added a highly-qualified and broadly experienced solicitor to our ranks.


With years of working in close proximity with SMEs, we have seen first-hand the value of having an employee handbook and contract of employment for staff. On the flip side, we have unfortunately seen the ramifications of not having one, too.


Our advice is to protect yourself legally, and in turn protect your staff - that way everyone wins.


What is an employment contract?

The employment contract sets out your employees’ rights, responsibilities and duties within the employment relationship.


However, as an employer you also need a set of policies complying with the Acas Code on grievance and disciplinary procedures.


Your employees also have statutory rights to holiday leave and pay and it makes sense to set these details out in a policy.


These can be contained in a company handbook, employers’ handbook or staff manual. UK employers are not obliged to have a formal handbook, but they must have certain key policies and procedures written down.

What is an employee handbook?

An employee handbook, sometimes referred to as a company handbook, sets out policies that can form part of your employment contracts.


However, if they are minor or non-detrimental and they are not part of the contract of employment, they can be updated in line with current legislation as and when required, without having to obtain your employee’s agreement.


By leaving policies and procedures out of the employment contract, you also protect yourself from a breach of contract claim if you fail to adhere to a policy.


For instance, it is vital to include a disciplinary and grievance policy that complies with the Acas Code.


Failure to follow the Acas Code in a grievance or disciplinary matter could result in a 25% uplift on an Employment Tribunal compensation award.


However, the procedure is better set out in a policy so if there is a failure to follow it to the letter, this will not result in a breach of contract.


Some terms which are also often included in a company handbook, such as sickness and holiday rights, are contractual as they must be included in the statement of employment particulars which all employees must receive under the Employment Rights Act.

Writing an employee handbook

The company handbook can begin with an introduction to the company, setting out your organisation’s aims and ethos. It should then explain your company’s employment policies.


While every company handbook will be unique, there are some common elements.


These include:

  • Whistleblowing policy

  • Bribery Act policy

  • Maternity, paternity and adoption policies

  • Parental leave policy

  • Time off for dependents

  • Compassionate and bereavement leave

  • Flexible and home working policies

  • Equal opportunities policy (when considering a discrimination claim an Employment Tribunal looks for evidence of this policy as proof an employer is following an equal opportunities process)


The list of policies that might go in your employment handbook is long and not all policies will be necessary in all industries or for all companies.

How we can help

Many small business employee handbooks start with a handful of policies which are added to over time.


If you are without an employee handbook, this is something our legal department excels in supplying.


Additionally, if your business already has the bones of a handbook, our solicitor can review and update your policies to ensure they comply with employment law changes.


For example, we would review your retirement policy to ensure you avoid unintentionally falling foul of recently-introduced age discrimination legislation.


We also have the capacity to work with larger employers, providing new company handbooks that are up to date with current legislation and that meet the needs of the business; for example, by including a Bribery Act Policy.


We can explore your requirements in detail to ensure your company handbook is legally compliant and meets the needs of your business.


So whether you are providing an employment handbook for the first time, updating a number of policies, or introducing new policies as your business grows, you can trust your handbook is fit for purpose.


Get in touch to discuss how we can help your business.